Legislative Update: March 11, 2019

March 11, 2019

Gov. Pritzker Proposes a $3.4 Billion
Tax Hike on Illinois Families and BusinessesLast Thursday,
Governor JB Pritzker finally unveiled his plan for a graduated income tax in
Illinois. Pritzker’s proposed rates would result in a $3.4 billion tax hike on
Illinois families and businesses.

Prior to the
announcement of the proposed graduated income tax rates, I joined members of
the House Republican Leadership Team at a press conference where we announced
our unanimous opposition to a graduated income tax structure. Click
here to watch my comments at the press conference.

The Governor’s
proposal would move Illinois from a flat income tax rate of 4.95% to a
graduated income tax with six tax brackets. Families and small businesses with
income between $250,000-$500,000 would pay a state tax rate of 7.75%, while the
highest rate of 7.95% would apply to all income over $1,000,000. As many small business owners file their tax
returns as individuals, Pritzker’s tax hike would hit Illinois small businesses
especially hard. In 2017, small businesses were responsible for 70% of
Illinois’ jobs.

Illinois’
corporate income tax rate would rise from 7% to 7.95%. Coupled with Illinois’
Personal Property Replacement Tax of 2.5% on corporations (1.5% on
partnerships, trusts, and S-corps), corporate income taxes would rise from the
current 9.5% to 10.45%, one of the highest tax rates in the nation.

If
approved by a three-fifths majority of the House and Senate, a question of
whether the Illinois Constitution should be amended to allow for a graduated
income tax would be placed before all Illinois voters. It is important to note
that the Governor’s proposed rates would not be enshrined in the Constitutional
Amendment. For taxpayers, this means that if and when the flat tax guarantee is
removed from the Constitution, lawmakers will have a great deal more
flexibility to raise tax rates to fund new spending.

Upon
learning the proposed rates, several Illinois
business leaders
spoke out against Gov. Pritzker’s tax hike that will drive families and jobs
out of the state:

Mark Denzler, President and CEO of the
Illinois Manufacturers’ Association: “Today’s massive tax hike proposal will further harm the state’s
manufacturing sector, which has already lost more than 300,000 jobs since the
turn of the century. Illinois cannot afford to lose more of these good, high-paying
middle-class jobs. Taxing and spending are not the answer to our daunting
challenges. The governor’s plan will vault Illinois to the 3rd highest
corporate tax rate and 8th highest individual tax rate in the United States.
Given that we already face the highest property taxes in the nation, the most
glaring part of today’s announcement is what is not included: there is no
mention of property tax relief for job creators or curtailed government
spending.”

Illinois Chamber of Commerce President
and CEO Todd Maisch: “The
Illinois Chamber realizes that Governor Pritzker has inherited real and serious
fiscal problems. Unfortunately, his plan for a new tax increase is very
unlikely to solve them. Taxing businesses and business owners without
restraining state spending nor taking measures that will spur economic growth
sends exactly the wrong message to job creators who are already questioning
their commitment to Illinois. When they choose to move investment across state
lines, government loses tax revenue and our communities take a hit. It is
important to note that the increase on the ‘2.7 percent’ of taxpayers the
governor is targeting will pay much more than the $3.4 billion net income the
plan claims it will generate. They will also pay for the ‘tax relief’ afforded
to other taxpayers. Clearly, this plan will trigger a serious reaction from
employers, especially since the plan only addresses the perceived budget
deficit and does not make any meaningful dent in Illinois’ backlog of unpaid
bills nor the future spending demands of progressive members of the governor’s party.
The plan should be viewed for what it is: merely a first installment.”

National Federation of Independent Business
Illinois State Director Mark Grant: said if Pritzker’s plan were to go through,
he would expect small businesses to pack up and take their jobs with them. “And
then what happens is the people left behind are stuck with new bills and then
all the pension costs we have.”

Warrenville Mobile Office Hours a SuccessOn Friday I held mobile office hours at the Warrenville Public Library, and
several constituents stopped by to say hello or to talk with me about issues
related to state government. We had great conversations about the proposal for
a graduated income tax, the new minimum wage hike that will take effect next
year, the need for pension reform and the need for new business and job growth
in Illinois. I want to thank everyone who came out to this event. Future mobile
office hours will be held throughout the year in the 41st District.
These events will be publicized through my E-Newsletter and on my web site at https://repwehrli.com.
No appointments are necessary at mobile office hours, so please stop by a
mobile office hours event that is convenient for you.

COGFA Reports on FY19 Revenue Trends
The Commission on Government Forecasting and Accountability (COGFA), the
budget-monitoring arm of the Illinois General Assembly, disclosed February 2019
budget numbers, including significant figures on Illinois general-funds cash
flow trends, in its latest “Monthly Briefing.”
Working with the Department of Revenue on cash flows in February, COGFA reported
continued increases in collections on key Illinois taxes such as personal
income and sales, although these increase were not sufficient to cover soaring
spending responsibilities in areas such as pensions and Medicaid. Personal
income tax payments rose $37 million in February 2019 over the comparable
figure in February 2018. This helped to support an overall increase in February
State general-funds inflows of $38 million during the year-over-year period. While
this was not a sufficient increase to enable the State of Illinois to start
paying back its more than $8.4 billion in unpaid bills, it enabled the State to
financially hold its own during the 28-day month.

Wehrli Signs On as Chief Co-Sponsor of Clean Energy Jobs ActThis year I am the lead Republican on legislation that would make Illinois the national leader in renewable energy. The Clean Energy Jobs Act seeks to move Illinois to 100% renewable energy by 2050, a move that represents a substantial increase in renewable energy expectations when compared to the Illinois Future Energy Jobs Act of 2016. The Clean Energy Jobs Act builds upon the 2016 Act and sets new, higher standards for Illinois’ energy usage. While I admit 100% renewable energy by 2050 might not be fully realistic, we need to trend toward that number and commit to being a national leader in renewable energy.

The legislation,
filed as SB
2132 in the Senate and HB
3624 in the House, was written based on information gathered from a
clean energy listening tour, which included 60 meetings across the state. The
bills target four primary goals:

Ensuring
that all 102 Illinois counties benefit from an improved clean energy economy

Providing
a path toward 100% renewable energy in Illinois by 2050

Moving
the transportation sector away from gasoline and diesel-powered energy and
toward electric-powered cars, mass transit and other transportation sources

Ensuring
a carbon-free power sector by 2030

These are lofty
goals, but they are necessary if
we want to protect the air we breathe and the quality of the environment for
future generations. By embracing clean energy technologies like wind, solar and
other renewables, we are taking bold steps to ensure our children and grandchildren
enjoy a healthier future.

Illinois
Treasurer’s Office Continues to Return Unclaimed Property to Illinoisans
During the second half of 2018, $2,512,917 was returned to the rightful owners through
the Illinois Treasurer’s Office’s “Money Match” program, also known as the
I-Cash program. The State Treasurer is currently holding approximately $2.9
billion in unclaimed funds for Illinoisans. The State holds these lost funds
until they are claimed by either the original owner or by their heirs.

Property is returned to its
rightful owner at no cost when proper identification is provided.

Wehrli
to Host Environmental Town Hall Meeting on April 13 in Naperville
Please mark your calendars for an upcoming Environmental Town Hall Meeting I’ll
be hosting on Saturday, April 13 from
10:00 AM until noon at North Central College in Naperville, in the Wentz Science Center’s Stevenson Hall. I
will bring together experts for a meeting that will focus on the Clean Jobs Act
and other environmental legislation and issues. Additional information will be
coming soon, but please save the date!

Later in the month, on Wednesday,
April 24, I will be hosting a general topics Town Hall Meeting at the
Naperville City Hall from 7:00 PM until 8:30 PM. I have the council chambers
reserved, and after I provide a brief Springfield update, I will take questions
from the audience. I hope you will come out for this informational meeting. I
look forward to your questions!

Naperville
Tops New Best of the Best ListsNaperville recently received top honors in two new rankings
for the best of the best. Niche.com recently named Naperville, IL as the city
with the best
schools in the United States, and Maxpreps.com dubbed
Naperville the “best
sports town” in Illinois. In the national Niche.com
rankings of best cities to live in America, Naperville was recently ranked #6,
behind Arlington, Va.; Ann Arbor, Mich.; Berkeley, Calif.; The
Woodlands, Texas; and Plano, Texas. In 2018, Naperville was the No. 1 city
according to Niche.com.

Illinois Economy Producing New Jobs in
Service-Intensive Sectors
A report to the General Assembly, “Illinois Employment and Wage
Update,” works with data on the Illinois economy to analyze where
new jobs are being created, and describes the character and educational
qualifications of these jobs. Data from the Illinois Department of Employment
Security (IDES) and other sources shows an enduring trend within the Illinois
job market towards labor-intensive services, particularly in the fields of
education and health care. A look at total paycheck numbers in eleven defined
employment sectors, ranging from mining to leisure and hospitality, shows a decade-long
decline in the number of Illinois workers who make or build physical objects.
For example, the number of Illinois paychecks paid out to manufacturing workers
dropped from 657,400 in 2008 to 589,300 in 2018. While all of this decline was
notched in only two years – the economic-downturn years of 2009 and 2010 – the
pink slips handed out during the so-called “Great Recession” were not fully
made up during the following eight years. As economic activity continued to
move to other U.S. states and abroad, Illinois factories rehired less than
one-third of the manufacturing jobs lost during the recession. There have been
28,300 new manufacturing jobs created in Illinois since the beginning of the
post-recession upturn in 2010.

Other Illinois
economic sectors display much better numbers, but fields such as “professional
and business services” (148,800 new jobs created in Illinois since 2010) tend
to be areas of professional education where jobs are concentrated in the
greater Chicago area. Furthermore, other areas of Illinois net job creation
tend to be fields where employers demand specialized experience and educational
training. This is particularly significant with respect to new jobs in
“education and health services” (98,200 new jobs created in Illinois since
2010), as hospitals and health clinics want people with educational credentials.
One major sector, “leisure and hospitality” (103,300 new jobs created in
Illinois since 2010) is creating new non-credentialed jobs across Illinois.
However, these are lower-paying jobs than the manufacturing jobs that have been
lost.

Illinois Scraps Controversial PARCC Testing
in Schools
The Partnership for Assessment of Readiness for College and Careers (PARCC)
test was first administered in Illinois schools in 2015 for students in grades
3 through 8. PARCC data was supposed to provide useful information for teachers
and administrators on how to improve the Illinois classroom experience.

While PARCC
professionals had invested large quantities of work to generate a statistically
valid test experience, and large amounts of data were collected, the test
generated a great deal of concern from Illinois teachers and parents. PARCC
tests took over, and siloed away from teaching, large segments of
teacher-student time. Teachers had to reallocate classroom time to prepare for
and administer the test. The PARCC test results were calibrated so as to make
it look like many Illinois students were enrolled in failing classrooms. PARCC
assessment professionals did not want Illinois teachers and educators to become
complacent about their performance, so they calibrated the test and its results
to demand very high standards from grade-school students. As a result of this decision,
few students, schools, and school districts could perform adequately on the
PARCC grade scale.

The PARCC test
came to be widely disliked and the Illinois State Board of Education (ISBE)
announced in late 2018 their intention to move away from this exam. Last week
the ISBE announced its switch to a new standardized test, the Illinois
Assessment of Readiness (IAR), for the student age groups previously targeted
by PARCC. The IAR is approximately two-thirds of the length of the PARCC test
and requires less time to administer to students. The ISBE
announcement was made on Tuesday, March 5.